B4U India: Satyam sees no U.S. outsourcing slowdown

Satyam sees no U.S. outsourcing slowdown
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reuters india on 16 November, 2007 09:47:00
 
By Sumeet Chatterjee
BANGALORE (Reuters) - Indian software firm Satyam Computer Services sees no
slowdown in U.S. outsourcing demand even as the world's largest economy lumbers
under the weight of a housing downturn, a senior official said.
"U.S. is beginning to report a good pipeline now, especially in retail where
recently we had some good success," Virender Aggarwal, a director, told Reuters
in a phone interview from Manila on Friday. "The sentiment stays bullish as of
today."
Investors have been worried about the impact of the U.S. subprime mortgage
crisis on IT spending and Cisco Systems Inc Chief Executive John Chambers said
last week that the company had seen "dramatic decreases" in orders from U.S.
banks.
India's No. 4 software services exporter Satyam, which specialises in business
software, is negotiating about three deals close to $100 million each and five
deals in the range of $20-$50 million, Aggarwal said.
Seven of those potential deals are in Asia-Pacific and one in South Africa,
said Aggarwal, who heads the business in Asia-Pacific, Africa, India and the
Middle East.
"My feeling is about three deals will close by January," he said.
The United States contributed 58.4 percent of New York-listed Satyam's revenue
in the September quarter, down from 66 percent in the year earlier period, as
it bagged more outsourcing deals in Europe and Asia-Pacific.
Indian software firms get more than half their revenue from the United States,
but companies are looking to expand business elsewhere because of a more than
12 percent rise in the value of the rupee against the dollar.
JAPAN FOCUS
Satyam, valued at $16 billion, is looking to acquire an IT services company in
Japan, having a staff strength of 70 to 100 people, to boost its presence in
that country, Aggarwal said, but declined to give details.
"Hopefully, we will make much greater inroads into Japan going forward because
the demand in Japan is almost infinite," he said, adding Japan currently
accounts for less than 2 percent of Satyam's revenue.
Hyderabad-based Satyam, whose leading clients include General Electric, Qantas
Airways and Nissan Motor, was also looking at increasing revenue share from
India to 5 percent by March 2009, up from 3.5 percent now.
Shares in Satyam were down nearly 2 percent at 420.50 rupees by 0700 GMT in a
Mumbai market that was down 0.14 percent.
The stock has fallen more than 13 percent this year, sharply underperforming a
43 percent rise in the main index, on worries about the rising rupee and a
possible slowdown in the U.S. economy.
The sector index has shed more than a fifth this year.
Satyam shares trade at 17 times fiscal year 2008 earnings, compared to 19 times
for top software services exporter Tata Consultancy Services Ltd and 21 times
for second-ranked Infosys Technologies Ltd.